Basic FHA Loan rules state that you need to wait the following time period before you can get a new FHA loan:

• Bankruptcy, you must wait at least two-year past the discharge date to get a new loan. 
• Foreclosure, you must wait at least three-years beyond the Sheriff Sale date.
• Short sale, you must wait at least three-years past the date the home sold.

But under a new federal program called “Back to Work – Extenuating Circumstances”, if you have had a foreclosure, short sale, deed-in-lieu of foreclosure, or have declared bankruptcy recently - you may qualify for a new home loan in as little as 12 months if you are working and can document extenuating circumstances caused your foreclosure, short sale, or bankruptcy.

 

Do You Qualify for the Back to Work Program?

 

FHA will consider you for eligibility if you had a financial hardship in the past but can now document the follow circumstances about yourself:

• You meet basic FHA loan guidelines (except for the bankruptcy,  foreclosure, or short-sale)
• You can document the mortgage or credit problems resulted from a financial hardship that lasted at least 6 months
• You have re-established a good credit history the past year
• You have completed HUD-approved housing counseling

Your FHA mortgage lender will first have to determine if you meet the FHA loan requirements before you can apply for a FHA loan under the Back to Work program. You will need to explain how the financial hardship was something beyond your control that reduced your income or caused you to lose employment.

 

The biggest requirement of the Back to Work program is you must prove your household income dropped by 20% or more for at least six months to qualify.

 

You also need to prove re-establish credit.  You must have a 12 month record of on-time rental housing payments with no delinquencies, and not have been 30 days late on more than one non-housing loan payment.

 

If you still have any open collection or judgment accounts, then a “capacity analysis” will be done to see if you can repay those creditors.

 

To start a Back to Work application with an approved FHA lender you must first take a “Pre-Purchase Counseling” course with a HUD approved housing counseling agency at least 30 days before you start the application. A certified counselor will assess your debt, ability to afford the mortgage, features of the mortgage, explain mortgage insurance and the loan application process.  Your certificate is valid for 6 months.

 

There are many HUD-approved housing counseling agencies to choose from by searching the internet, or calling us for a referral.

 

Cambria Mortgage is proud to offer the Back to Work program in Minnesota and Wisconsin.   Ready to start?  Call (651) 552-3681 or Apply Online 24/7.